By Andrew J. Sommer and Megan S. Shaked
This article addresses alternatives to reductions in force, or RIFs.[1] An RIF is an involuntary termination of employment, usually due to budgetary constraints, changes in business priorities or organizational reorganization, where positions are eliminated with no intention of replacing them.
Because RIFs can be costly to implement, increase the potential for employment lawsuits and lower morale of the remaining employees, employers may consider alternatives such as furloughs, voluntary separation programs, or VSPs, and early retirement incentive plans, or ERIPs.
Such alternatives can help reduce employers’ labor costs or workforce while avoiding or minimizing adverse consequences associated with a RIF.
This article discusses each of these alternatives to RIFs in detail to help you and your employer client decide which alternative is best under the circumstances:
Furloughs
One alternative to a RIF is a furlough.
Furloughs are temporary layoffs or some other modification of normal working hours without pay for a specified duration. The structure of furloughs can vary. For instance, in some furloughs employees have consecutive days of nonduty — for example, taking the first two weeks of each month off — or take off a designated day each week.
In another example, the employee may take a certain number of days off each month, but which days those are may vary from month to month. Some employers may allow employees to choose which days to take off on their furlough. A furlough may also be a temporary layoff, where the employee remains employed with a predeterminated return date, which may be extended depending on the circumstances.
Furloughs can eliminate the need for a RIF in some cases by reducing the employer’s payroll costs. However, even on unpaid days, furloughed employees do cost the employer something, because employees on a furlough usually receive employment benefits. In a unionized workforce, employers must negotiate the furlough terms and schedule with the union.
Key Pros and Cons of Furloughs Versus RIFs
There are several pros and cons to consider when determining whether a furlough is a good alternative to a RIF. The advantages of furloughs over RIFs include:
Employers avoid employment terminations and the attendant potential legal liability.
Employees don’t lose their jobs.
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